23 August 2019
- We are now bullish on short-term supply. We have picked up lower supply conditions across both the Pacific and Atlantic basins which will provide some support to prices. However, our Implied EU Days of Consumption (DoC) continues to increase alongside the weak coal burn in the last few weeks. The recent buildup in global inventory should ease as we head into September.
- We are also bullish on demand. We expect lower renewable power generation which should correspond to higher fossil fuel utilization. If realized, this should lead to tighter EU DoC. Chinese coal demand has improved as our implied DoC index continues to tighten. North Asian demand has now weakened after the recent spike.
- Our short-term macroeconomic view has turned bullish. Our proprietary currency model has strengthened after turning bearish in week#31. Energy intensity in the EU continues to improve which should be a good proxy for medium term demand. We expect short-term credit conditions to gradually improve from early September (week#37) onwards. We expect new macro data towards the end of next week which will indicate whether the earlier rebound in manufacturing conditions will be sustained.